Christi Craddick: The TT Interview

By Jim Malewitz, The Texas Tribune

Published 08/15 2014 03:05PM

Updated 08/15 2014 03:07PM

The Railroad Commission of Texas has a new leader.

The state's oil and gas regulator, which has three commissioners, elected Christi Craddick, a Republican, as its chairman Tuesday. She replaced Barry Smitherman, who will be leaving the commission after choosing not to run for reelection.

Craddick, an attorney specializing in energy and water issues, was elected to the commission in 2012. A native of Midland, she is the daughter of state Rep. Tom Craddick, a Republican who served as Texas House speaker from 2003 to 2009.

Craddick takes over a commission overseeing a historic surge in oil and gas production. Spurred by technological advances like hydraulic fracturing, Texas has reached production numbers unseen in more than three decades. The commission has also drawn increased scrutiny from those who have raised concerns about the industry’s impact on the environment and public health.

Craddick sat down with the Tribune on Wednesday. She discussed the agency’s dual role as an industry watchdog and champion, efforts to ban fracking in Denton and the commission’s efforts on earthquakes and disposal wells.

The following is an edited and condensed transcript of the interview.

Texas Tribune: So what does it mean for you to be chairwoman now? How has that shifted your role at the commission?

Craddick: We are all elected equally statewide as commissioners, and then the chair passes among the three of us. The primary role of chair is to preside at the meetings. There have been other things that the chair has done historically, but that’s basically what the role has become. Also, we probably get the first phone call over here if somebody has an issue. But I think we’re all equal and we all have our own agendas for doing things.

TT: Am I always to refer to you as chairman, or is it chairwoman? Because I noticed on the railroad commission website, it says chairman.

Craddick: We’ve gotten phone calls all over asking about that. We’ve had this funny three-day debate, and I’m like 'I don’t know, let’s just call me chairman.' Other people are like, ‘why aren’t you Madam Chair?’ And that sounds weird to me. Others prefer that, but chairman is what I am.

TT: Following your election you released a statement saying you had plans to bolster the agency’s resources. Has the growth of the agency kept up with the boom? What are the biggest concerns on that front?

Craddick: I think the biggest challenge we have at the commission are the same ones the industry is having, which is finding and keeping competent people. So part of what we started last legislative cycle is educating the Legislature about what we do. More of them understand than we realize. They might not understand what we do day to day, but they do see how many tax dollars the oil and gas industry is bringing into the state. We will be asking for more people, and more dollars to go with those people.

TT: What are the commission’s biggest needs right now?

Craddick: The oil and gas industry is predicting that its permits applications might go up as much as 50 percent by next year, so we are tying to gear up for that. Also, with the amount of pipe being built, we are asking for additional pipeline safety inspectors.

TT: So we’re in this boom, and a lot of people are wondering how long this is going to last. From your perspective, do you feel like some of the communities that are fueled by this growth are ready for – I don’t know if we should call it a bust – but are they ready for what comes after the boom?

Craddick: I like to call it sustained economic growth, so no boom. Because that means bust, right? If you ask communities, yes, there are a lot of growth pains across the state. But overall, they’d rather have those growth pains, where they don’t have enough infrastructure. They’d rather have that than the Great Recession. Remember this state was blessed in some respects to avoid a big chunk of that. Look at what’s going on across the rest of the country. If you don’t have oil and gas in your communities, you might not be out of the Great Recession. How long do we think it’s going to last? I don’t know. And if anybody says they know that, every oil and gas company in the world wants to know that, so I’d question that.

TT: Some experts say today’s boom – or whatever you want to call it – is fundamentally different than those past, because of the new technology that’s fueling it. But if we didn’t have some sort of bust or slowdown, this would be the first time ever. Do you feel like it’s safe to assume there will be some sort of slowdown?

Craddick: I think you’ll see typical business ebbs and flows. But overall, this is a healthy industry. This is an international commodity. You’ve got real growth in China. You’ve got unrest in parts of the world that normally provide oil to the rest of the world. You have issues with Russia. So those are opportunities for the U.S. to work with Europe. And you see Mexico opening up their markets finally. But Texas is particularly well positioned. Do I think we’ll see a bust? No. I hope not, as long as the federal government doesn’t overstep with too onerous regulations.

TT: When the Railroad Commission is looking at Environmental Protection Agency regulations – such as those addressing air quality, does it also consider some of the positive impacts it might have, such as whether fewer case of asthma or heart disease might come out of it?

Craddick: I think we’ve got to be fair and balanced. Yes, we’ll look at some of that. But I also think you have to look at the cost, too. And the science on the health side is more difficult to prove than other things. I think states do it better when it comes to regulations. One-size-fits-all doesn’t work, because the geology is different, the communities are different. The United States is just too big.

TT: While we’re on the topic of local control, Denton’s attempt to ban fracking within city limits is a big issue in the Texas energy world. Should cities be allowed to regulate that aspect of drilling if that’s what they decide they want?

Craddick: Personally, no. I think they are allowed to have setbacks and zoning for health and safety reasons. But remember in Texas, the mineral estate takes precedence over surface. So we issue permits because companies are allowed to drill those wells. That being said, companies need to do a better job working with communities. But I think there’s a lot of misinformation out there about what goes on when your fracking a well. It seems like in Denton the two sides are talking past each other.

TT: But the idea of banning fracking isn’t necessarily saying that a railroad commissioner can’t issue a permit, right? A ban would certainly impact production levels, but how would it impact how you would issue a drilling permit?

Craddick: I don’t know the answer to that yet. I think we’ll see what happens in Denton. It’ll be interesting. If you ban one technique – and there are multiple techniques for completing a well – you’re essentially making that not drillable. I don’t think it’s fair to the operator, or the mineral owner. It’s their dollars that you’re impacting.

TT: How would a successful fracking ban in Denton – if the courts upheld it – impact Texas at large?

Craddick: I think we’d be looking at Colorado. Although it's doing better in recent weeks, it’s the fifth largest state in terms of (producing natural gas), but they seem to fight a lot. And that means investors don’t want to come do business in the state.

TT: Some big news coming out of the Railroad Commission this week was the agency’s proposal on disposal wells. Some folks following the issue are saying the Railroad Commission is implicitly acknowledging the science showing a link between disposal wells and earthquakes. Is that accurate?

Craddick: On April 1, we hired a seismologist (Craig Pearson). He has done a great job after we didn’t have anybody with that expertise. I don’t know we yet know (whether disposal well drilling can cause earthquakes), because I’m not the scientist. Part of what we tasked Dr. Pearson to do was to look at our rules, and see if there were any potential issues, what we needed to do to adjust our rules. So we think this is a good first cut, and we look forward to comments back. Does it mean we know anything more? I don’t know the answer to that. I do think it’s important that we take earthquakes seriously, because if I lived in this community I’d be concerned if my house was shaking as well.

TT: If I'm understanding it correctly, the Railroad Commission has a dual mission: It’s a watchdog over the industry, and it promotes the industry. How do you assure the cynical Texan that the agency is protecting public safety when it’s also championing the industry?

Craddick: I think that’s an interesting question, actually. When you talk to industry, they tell you they want a strong regulatory body, and I think we are strong regulatory body. We have a challenge that nobody knows what we do. So I’ve worked on that over the past couple months – education. I think the public has the right to know what we do, how we operate, that they have a voice down here. I’ve personally reached out to folks who haven’t felt like they’ve had a voice­ – the agriculture community. The Environmental Defense Fund has sat down with me. We have to listen to all concerns. I don’t think we’re overly industry friendly. We do inspect wells. If you call up here, we will pay attention. Industry does not control what we do. We’re science-based and look at things. I grew up in West Texas. Oil’s really important, but water’s the most important thing, and so is land.